To Do it Yourself or Outsource
A question large companies ask themselves a lot is whether to do a task or hire it out. The age old insource or outsource question.
Now let’s not get outsourcing and offshoring confused. Outsourcing is hiring an outside entity to complete a task for your company. Offshoring is taking an entire function and moving those roles to a foreign country to take advantage of lower cost labor.
In the context of a small company, outsourcing is simply freeing your time. You, the business owner, have one resource you can never get back, time. By hiring out tasks you can free up time to focus on your core competencies.
The way you determine whether or not to outsource a task is simple. Write down the task and put next to it if it’s a core competency. Is this something you are really good at doing?
Next to that, write down if it’s additive to your end product. For instance, I am very good at sanding and by sanding I can ensure my product is free of swirl marks and defects. That improves my product quality and fetches me higher prices. I am also very good at manipulating spreadsheets, but that does not improve my product. I could higher out my accounting to a service and they can track my expenses for me, freeing up my time to focus in areas that drive product.
But before I go hire an accountant I should check to see how much does that cost. That’s the final item for your list. Is it worth it or should you keep doing it for now? I recently had a case where I needed to surface a slab of wood. By my calculation I could have done it myself to the tune of $200 in materials to build jigs and 55 hours of labor. That total cost given a shop rate of $50 per hour puts me all in on that task at $2,950.
Instead, I found a company with a better tool who flattened the slab for $217. They made the investment, they have the skills, and they provide a service at a could not achieve in my small shop. For roughly the exact same price of materials to do it myself and I had the work done and it only cost me 2 hours of drive and wait time.
Take a hard look at tasks taking you a considerable amount of time and evaluate whether it would be a more efficient use of your money to save you time.
After all, money is nothing more than an enabler. It helps us business owners do more and faster. So use that money to its fullest so you can maximize the return on your time.